Bill designed to protect independent pharmacies passes Senate committee

02/14/2018 01:50 PM

FRANKFORT — A bill which would move Medicaid reimbursement for pharmacies from Managed Care Organizations to the Cabinet for Health and Family Services was passed on Wednesday by the Senate Standing Committee on Health and Welfare.

Senate Bill 5, sponsored by Sen. Max Wise, R-Campbellsville, would make the Department for Medicaid Services the administrator of all benefits payouts to pharmacies.

Wise feels that one of the biggest reasons for the legislation is to protect the retail and independent pharmacies in Kentucky.

Currently, Kentucky spends $1.68 billion on pharmacy benefits for the Medicaid Managed Care population which is roughly for 25 million prescriptions.

Of the $1.68 billion spend, independent pharmacies currently receive an average of 85 cents dispensing fee when the federal Medicaid recommends a $10.64 dispensing fee for Medicaid fee for service, which is less than 10 percent of the federally recommended dispensing fee.

One of Wise’s concerns is the control that, pharmacy benefit managers, or PBMs, have under the current system with little or no oversight.

PBMs get to set contract terms with pharmacies, PBMs can implement new fees on pharmacies, PBMs can even determine what drugs will be dispensed at local pharmacies by requiring a certain drug to be dispensed only from the PBMs mail order pharmacy or specialty pharmacy,” Wise said. “In other words, PBMs get to set all the rules with little to no government oversight whatsoever.”

Another objective of the legislation is to raise the dispensing fee to pharmacies up to the federally recommended rate.

“Senate Bill 5 is designed to take the money that PBMs and MCOs are sucking out of the billion and a half that we spend, and instead, use at least a portion of it to pay a federally recommended minimum dispensing fee to pharmacists with the hope that any additional savings would be returned to the state.” Wise said.

Wise says the basis for the bill is the fact that MCO’s and PBMs have been reluctant to share information about the breakdown of how the $1.68 billion dollars is distributed between MCOs, PBMs, and pharmacies.

“I can’t sit here representing my district back home and allow independent pharmacies to go out of business because corporations choose not to share information with our health cabinet or this committee on how much of these taxpayer dollars, which should be going to pharmacies and patients, they’re keeping,” Wise said.

Department of Medicaid Services Commissioner Stephen Miller, expressed numerous concerns with the legislation including how to manage the 340B Drug Discount Program, a US federal government program created in 1992 that requires drug manufacturers to provide outpatient drugs to eligible health care organizations and covered entities at significantly reduced prices.

“Operationally, that is very tough, may border on impossible to deal with,” Miller said. “Now, an individual, whether they are under managed care or under fee for service follows the individual. For pharmacy services as now laid out in this amendment, they’ll be managed care when they go to a hospital network or contracted service for a pharmacy provider, but they’ll be fee for service when they go to all other points of sale.”

SB 5 moves on to the full Senate for consideration.


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